Oil Sets a New Record of $89 - 10/17/07

Oil prices touched a new peak of $89 a barrel on Wednesday as investors fretted over possible military action by Turkey in northern Iraq and a potential supply problems this winter.

The rally renewed worries that soaring energy costs could damage world economic growth and prompted producer group OPEC to consider calling a formal meeting Nov. 17 on output policy during a heads of state conference in Saudi Arabia, earlier than expected.

"There will be a meeting of ministers, initially informally, but there may be a formal meeting. We are still a month away and it depends what transpires before then," Nigerian Minister of State for Petroleum Odein Ajumogobia told Reuters.

U.S. crude entered a seventh day of gains, soaring $1.39 to trade at $89 before pulling back to $88.24 by 1:30 p.m. EDT -- a 63 cent rise. London Brent crude rose 25 cents to $83.80.

Turkey's parliament Wednesday granted its troops permission to launch an attack against Kurdish rebels inside Iraqi territory, despite international pressure to hold off on a strike.

The tensions are seen as dimming hopes for a recovery in Iraqi oil exports via Turkey, which have been sporadic since 2003. But traders say the greater fear is the risk of further unsettling the Middle East region, which pumps a third of the world's oil.

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